JIM RYDBOM/jrydbom@greeleytribune.com
A aerial photograph taken in 2008 of the Kuner Feedlot near the town of Kersey which is owned and operated by Five Rivers Ranch Cattle Feeding. Weld County is home to the two largest feedlots in the nation.

Related Media

Struggling cattle feeders and beef packers need an expansion of the U.S. herd, but cattle numbers aren’t expected to reach pre-drought levels until 2018, according to new U.S. Department of Agriculture’s 10-year projections.

Luckily, the USDA’s long-term forecast, released Monday morning, wasn’t an all-doomsday outlook for the many local feeding and packing operations — the cornerstone of an agriculture industry in Weld County that’s worth $1.5 billion.

Corn prices, “normal weather” permitting, are expected to drop below $5 per bushel within two years and stay there through the next decade, helping with feed costs.

And — although U.S. beef consumption is expected to drop due to high prices at the grocery store, and beef exports are expected to decline during the next couple years — total red meat and poultry consumption is expected to increase throughout the next decade, with customers expected to purchase more chicken and pork.

The latter will help JBS USA — a Greeley-headquartered subsidiary of JBS S.A. in Brazil, with beef-, chicken-, pork- and lamb-packing operations — weather the storm of tight cattle supplies, according to industry experts.

The Texas drought of 2011 and the dryspell across the U.S. in 2012 caused feed shortages and forced ranchers and dairymen to liquidate some of their herds.

The U.S. beef cattle herd — having dropped from 92.7 million head in 2011 to 90.8 million in 2012 — is now at its smallest in 61 years, 89.7 million head this year, according to the USDA.

That tightened cattle supply has increased competition and the prices feedlots are paying for cattle, while the drought also has increased their feed costs.

And because of the small cattle herd, there’s less cattle going from the feedyards to slaughter at packing plants.

Packing plants are now over capacity; production isn’t keeping up with operating costs.

The tight cattle supply has caused red ink for feeders and packers for several months, and in January, it led to the decision to close a Cargill Inc. beef-packing plant in Texas.

The need for a larger U.S. cattle herd is huge for many in Weld County, where some of the nation’s largest feedlots and one of the largest U.S. beef packers operate.

“It’s certainly our most pressing issue,” said Cameron Bruett, a spokesman for JBS USA, adding that, while times will be tough, “JBS does not foresee the closing of any of its packing or feeding operations.”

“We’re going to look closely at what we can control ... our efficiency, our production expenses, strengthening our relationships with buyers,” Bruett added. “Just doing the day-to-day things to make us the most-efficient operation possible.”

While more cattle are needed to help the situation, cattle numbers aren’t expected to get back to 2011 levels until 2018 — dropping to a low of 89 million in 2014, then gradually increasing to nearly 93.5 million in 2018.

In 2022, the U.S. cattle herd is expected to reach 94.8 million head.

Those projections are based on “normal” weather conditions.

If drought persists, it would take longer to get cattle numbers back up — although, herd rebuilding could take place faster than expected with above-average moisture.

In the meantime, the tight cattle supply is helping ranchers get high prices for their cattle — although, they, too, are paying a pretty penny for feed, with pastures across the country dry and offering little to eat.

For feedyards and beef packers, there are only two things that will get them back to making a profit — one of them being more rain, noted Steve Kay, editor and publisher of Cattle Buyers Weekly, who has followed North America’s beef-processing industry for 25 years.

Moisture is needed to improve pastures and give ranchers confidence to expand the U.S. cattle herd.

Precipitation would also increase crop production and decrease feed prices for feed yards.

If normal weather patterns return, corn prices are expected to drop from about $7.60 per bushel in recent times to $5.40 next year, $4.10 the following year, and staying under $5 through 2022, according to the USDA’s projections.

Aside from rain, the other solution to make packing plants profitable is shutting down more beef-packing plants and feedyards and consolidating operations.

However, Kay, like Bruett, said he doesn’t expect JBS operations to be the ones that close.